Senior citizens will have taken a keen interest in the raft of fiscal measures announced by the Chancellor in the recent Autumn Budget.
For those retirement planning in Oswestry, Cheshire and across the UK, there will be some relief that Rachel Reeves spared tax-free cash. There had been rumours for months that the lump sum limit was at risk. During this period, financial advisers and pension firms reported a rush of savers withdrawing tax-free cash from their pension pots in anticipation.
As matters currently stand, people aged over 55 are eligible to withdraw 25% of their pension tax-free. This amount is currently capped at £268,275. For some people, the withdrawals will have been worthwhile, particularly if they had been planning to use the cash for a specific goal anyway. This might include paying off a mortgage or other debts, booking a dream holiday, or doing up the house.
For others, that money might have a more family-oriented objective. For some people, ‘gifting’ has become a more attractive option, following the announcement last year that unspent pensions would, in April 2027, become liable for inheritance tax. Financial experts have warned that gifting should be done with caution, and not if it adversely impacts your own retirement. Under current rules, it is not subject to inheritance tax if you survive for seven years after agreeing to gift.
Others may now be sitting on new cash in their bank account and find themselves unsure how to proceed. Financial advisers warn this group not to miss out on investment growth, and to be careful of HMRC rules around pension recycling.
